Bitcoin doubled in 45 days and became the most searched topic. A full analysis of the reasons for the surge in Bitcoin

Maybe you are also like me, happy and confused about the recent surge in Bitcoin prices. Happy because you finally get out of trouble or make a fortune, confused because you don’t know the reason and duration of this rise. After rationally and irrationally rushing into the market to wait for the price to rise, we should also calm down and look back to see what happened during this period of time to make the Bitcoin price double in 45 days.

Such a review and analysis may help us better understand how this decentralized market works.

The market has been suppressed for too long and finally released

Starting from Binance IEO at the beginning of this year, the digital cryptocurrency market, which had been suppressed for nearly a year, began to show unusual enthusiasm, and investors found a new direction for speculation.

In the past year, the trends of ICO, platform coins, and DAPP have appeared one after another, and then disappeared one after another. The market enthusiasm is gradually being worn out. In the second half of 2018, some exchanges even closed down or ran away. The market needs new hot spots to support transactions.

The IEO lottery-style coin purchase and the model of multiple returns after listing have driven the entire cryptocurrency circle crazy, and all investors are eager to grab shares of IEO projects on major exchanges. The market enthusiasm has gradually begun to recover, and the long-suppressed capital has begun to surge.

Market enthusiasm can also be reflected in the response to hacker thefts. In May, Binance Exchange exposed the theft of 7,000 BTC. In the past, such security incidents would cause market panic and a decline in transactions, but this time, neither Bitcoin nor Binance platform coins fell, but instead achieved a high increase.

Judging from the Bitcoin Panic/Greed Index, Bitcoin has completely changed from the "fear" mentality of the past to greed , even reaching the level of "extreme greed" on May 14-15. Generally, when there is "extreme greed", the entire market will frantically push prices up, and on that day, the price of Bitcoin once hit $8,300.

As the price of Bitcoin rises, more and more people are beginning to pay attention to Bitcoin as an alternative investment tool. In Baidu search engine, the term "Bitcoin rise" once rose to the top of the list, and in Weibo hot searches, Bitcoin rise also entered the top 10 hot searches.

Google Trends and Baidu Index have revealed to us that the number of people searching for "Bitcoin" through search engines has increased significantly recently, and this trend is not only in China, but also worldwide.

The atmosphere of fear of missing out on this wave of market trends began to spread in the market, and more and more people were looking for opportunities to enter the market.

This time it may not be "artificial pull"

If you are a reader of BlockBeats, you will definitely think that we will conclude in the article that the market is "manipulated". But in fact, in this article, we do not think that the recent market is artificially controlled, it is more like a spontaneous consensus reached by the market.

First, in terms of Bitcoin's market share, this round of bull market is mainly driven by Bitcoin prices . On the afternoon of May 14, Bitcoin's digital cryptocurrency market share was 60%, reaching the highest level since 2018. The last time Bitcoin reached this number was at the end of 2017, when the ICO trend had not yet emerged. Compared with the same period last year, the market share of non-mainstream tokens has dropped from 20% to 17%, that is, the main reason for the market rise this time is the rise in Bitcoin prices, rather than the altcoin market controlled by large investors, capital, and funds.

Another notable feature is that the recently popular PoS Staking currencies have not risen sharply with the market. The reason is that the capital party did not pre-release the token mortgage and take back the tokens to the market for trading to obtain liquidity . Readers familiar with BlockBeats must know that in the PoS ecosystem, the system will issue additional tokens. If they are not mortgaged, it means depreciation. Therefore, the community will mortgage most of the tokens and trade a small part of the tokens in the market to achieve a perfect state of the ecosystem. Judging from the current rate of currency price increase, the income obtained by placing it in the exchange is far greater than the income from mortgaging in the system to get the additional issuance reward.

However, PoS staking sets a time limit for token redemption. If an investor is going to increase the price in a certain period of time, he needs to prepare the chips to enter the market in advance. Obviously, the staking rate of PoS tokens such as Cosmos and Irisnet has not decreased. This fact tells us that the dealer did not "plan" for the arrival of this bull market, or did not receive the news of the increase.

Good news keeps coming: hold on, the team is working on it

In addition to the hot secondary market, the digital cryptocurrency market has also received a lot of voice and exposure in the media, which has played a significant role in fueling this round of market trends.

The well-known US exchange Gemini announced that it will enter the digital cryptocurrency offline payment business . The exchange will cooperate with Flexa Spedn to enable users to use BTC, ETH, BCH, GUSD and other tokens to pay in a large number of US chain stores, including Whole Foods Market, Barnes & Nobels bookstore, GameStop game store and other well-known chain stores. At the beginning of this year, the Lightning Network Torch Relay event also gave the vision of Lightning Network offline payment a preliminary shape.

BlockBeats also recorded 10 blockchain startups’ financing in the past two months, including PoS mortgage service provider InfStones’ $2 million financing, Simple Token (OST)’s $6.5 million financing, BloXroute’s $10 million financing, QEDIT’s $10 million financing from Alibaba, ErisX’s $20 million financing, BOLT Labs’ $1.5 million financing, Blockstakc’s $50 million financing, etc. According to BitMex research data, blockchain project owners received a total of $35 million in financing through IEOs in the first half of this year.

The return of capital to the digital cryptocurrency market and blockchain market also shows that big market funds are still optimistic about this industry and are more optimistic about newer, better and more advanced technologies.

On May 13, the famous Consensus conference was held in New York. Major institutions and capitals announced a large amount of good news at the event: TD Ameritrade Exchange announced that 2/3 of its business came from individual investors, Ant Financial will invest $100 million to build an ecosystem, Coinbase will promote USDC stablecoin in 85 countries, Fidelity Investments discussed STO liquidity, Chinese American presidential candidate Andrew Yang attended, and so on.

According to historical experience, the opening of the Consensus Conference every year will usher in a rise in the price of Bitcoin, except for 2018. After the opening of the Consensus Conference this year, the price of Bitcoin successfully broke through $8,000, and it seems that this curse has taken effect again.

Global economic weakness

The International Monetary Fund, the World Bank, and the Organization for Economic Cooperation and Development have all lowered their expectations for global economic development this year. The European Central Bank, the Federal Reserve, and central banks in Asian countries have all begun to rethink their monetary strategies in the face of economic downturn and inflation.

In contrast, Bitcoin's performance this year is exceptionally eye-catching, because the isolation of the blockchain world from the traditional financial world makes Bitcoin an asset that is not affected by the real world economy . For investors, investing in Bitcoin has become a strategy to resist global economic risks. In addition, the support of Bitcoin's community and miners has enabled it to remain the top cryptocurrency market in the 2018 bear market, and it will naturally rise the most when the bull market arrives.

The channels for traditional funds to enter the digital cryptocurrency market are also increasing. In addition to the common OTC windows, many fund companies and asset management companies are also doing old-money entry channels . Take Fidelity Investment in the United States as an example. After several months of observation and testing, the company will open Bitcoin buying and selling and trading functions for institutional investors in the next few weeks. A spokesperson for Fidelity said that several institutions have become its customers and are ready to start trading in the market. Grayscale Capital, which releases asset information every day, also reached its highest transaction volume of $140 million this year on the same day on May 13, and the scale of assets under management reached $1.7 billion.

In addition, institutional investors have also been extremely aggressive in the futures contract market . On May 13, the average daily trading volume of the Chicago Mercantile Exchange (CME) Bitcoin futures market exceeded US$1 billion, reaching 33,000 contracts, setting a record high and up 50% from a month ago. Circle CEO said: The surge in CME Bitcoin futures market transactions indicates that institutional investors are entering the market, and this day will be designated as the "Institutional Entry Day" in the future.

Many comments believe that the entry of institutional investors is an important signal to activate this round of bull market. Institutional investors enter the market when the price of Bitcoin is low, raise the price through market liquidity and news, and finally leave the market within a reasonable price range.

Can I still enter now?

Perhaps this is what you want to see most when you click on this article. According to historical data, it took 96 days for Bitcoin to go from $4,000 to $8,000, while it took only 45 days to double the price in the bull market of 2019. According to conventional logic, you may want to enter the market now, but is that true?

Someone left a message on BlockBeats to tell us that in a community of "resonance mode" Ponzi schemes, the person in charge publicly suggested that investors of resonance coins withdraw their coins for trading, which could earn them higher returns than resonance coins. This move made many people feel that the bull market is really coming, and holding spot coins would earn them more! But this is also the most risky moment.

A large number of opinions believe that Bitcoin has now entered the FOMO (Fear of missing out) stage. Digital cryptocurrency investors and other market investors who missed out on $20,000 that year are afraid of missing out on this round of market again.

At present, the market is more sensitive to prices, and capital is entering the market more quickly. If the bull market continues, the price increase will take a shorter time in the future. But this also means that the market risk is also increasing exponentially, so don't be blindly confident in the market trend.

Please note that the cryptocurrency market is far more risky than the traditional stock market. It can achieve a 20% increase in a single day, or a 30% plunge in a single day. Please operate with caution, choose a safe exchange, be wary of phishing websites, and do not trust influencers and social media messages.

Source: Blockchain